McKinsey: US and China to Drive Luxury Growth Through 2030

The global luxury market’s future growth is forecast to be anchored primarily by the top two markets - the US and China - at least until 2030 according to the ‘State of Fashion 2026’ report by McKinsey. The US with a market value of $130 billion is the world’s largest consumer of luxury and will grow by 5% CAGR through 2030. Meanwhile China, the second largest market with a $60 billion market value is projected to see slightly stronger growth at a 6% annual rate. Europe will trail behind the US & China at 2-4%.

The report notes that the desirability benchmarks for modern luxury consumers are changing. Legacy and brand lineage no longer hold the same currency as they used to, in the top two global markets. Instead, buyers are gravitating toward brands that offer deep personal resonance, mirroring their individual tastes and core values.

There is also a shift in how status in luxury is being viewed. Instead of just buying popular logos, consumers want to be recognised by selective inner circles. High-spending clients are gravitating towards smaller, less saturated brands which the report calls, ‘Challenger brands’, because they want recognition from a selective inner circle - those who understand the signal - rather than the general public.

Particularly in the US, 68% of the luxury consumers surveyed indicated that challenger brands best represent their personal identity and they are discovering them via social media, and resale trends and marketplaces.

Meanwhile in China, local heritage is taking precedence over foreign culture. For international luxury houses, success in China will increasingly depend on cultural relevance and emotional resonance, rather than relying on European heritage alone. The rise of Guochao (translates to national prestige) is reshaping China's luxury landscape.

Younger consumers are increasingly choosing domestic brands that celebrate the true Chinese culture through contemporary design, and local craftsmanship. For eg. Laopu Gold, a luxury jewelry brand launched in China in 2009 has emerged as one of the most popular brands among China’s elite and younger luxury consumers.

Artificial intelligence is reshaping the luxury discovery phase for both new and established buyers. In the US and China, consumers are utilising AI at the exploration stage to easily compare products and secure hyper-personalised recommendations.

For aspirational clients, AI is bridging a critical knowledge gap by making it easy to access information that is needed to navigate traditionally intimidating luxury landscapes. This trend spans demographics; 68% of Chinese Gen X AI users leverage the technology strictly for exploration, while only 18% use it to make buying decisions. Both in the US and China, 51% of millennials trust AI enough to actively drive their final purchasing decisions.